Progress Software Corp (PRGS) - Due Diligence

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66OpportunityDD: Jul 31, 2026Analyst: 65

paidPrice at analysis date

USD 40.3 (31/07/2026)

domainMkt cap

$1.65B

pie_chartShares

41.01M

candlestick_chart52W

$23.82-$49.88

trending_downShort interest

10.26%

INFONASDAQInformation Technology2801 employeesFounded 1981

Verdict: Moderately Attractive —

Cash-generative software roll-up trading at forward P/E 6.7x and EV/EBITDA 8.9x, with $305M annual FCF (30% margin) and disciplined deleveraging (−$110M debt in H1 2026). Base case FV $50 vs current $40.34 = +24% upside, but capped by high leverage (Debt/EBITDA 4.1x), MOVEit legacy litigation tail, and low organic growth (~4–7%). Domo acquisition (July 2026, $400M) is opportunistic but adds integration risk. Balanced R/R; not a compounder.

📊 DIANALITICS RESEARCH INDEXCompany & Thesis Assessment Score /100 — updated 2026-07-31

Progress Software Corp (PRGS)

Infrastructure Software · NASDAQ · Burlington, MA

"Cheap on FCF, hostage to legacy litigation and leverage."

FCF Machine 30% margin Leverage 4.1x EBITDA Fwd P/E 6.7x MOVEit Tail Risk Buyback +3.3% Yield

Fin. strength

/20 pts

EBITDA/FCF

/15 pts

Debt/leverage

/15 pts

Stage/business

/15 pts

Catalysts

/10 pts

Reg. risk

/8 pts

Risk/reward

/7 pts

Management

/5 pts

Sector/macro

/3 pts

Compliance

/2 pts

💡 Fair Value Estimate — EV/EBITDA on FY27E, peer-anchored

Fair value base case

USD 50.0

Range: USD 30.0-USD 65.0

Price at analysis date: USD 40.3 (31/07/2026)

Base upside/downside: +24%

Primary method EV/EBITDA on FY27E ($400M EBITDA, 8.5x peer-derived multiple). Implied multiple 8.2x within ±5% of nominal. Cross-check via P/FCF (11x on $305M TTM) reaches $52/sh, within ±5%. Sensitivity: ±1x multiple change = ±$9.75/share (±20% of FV). Weight distribution reflects VALUE profile bias toward downside protection (Bear 30% weight vs 25% neutral) — legacy MOVEit contingent liability + high leverage justify the tilt. ⚠️ Not investment advice.

Component	Assumption	USD/share
Core EV (EBITDA multiple)	FY27E EBITDA $400M × 8.5x peer-derived multiple = $3,400M EV / 41.0M shares	+82.93
Net debt subtraction	($1.33B total debt − $103M cash) / 41.0M shares	−29.76
Domo integration NPV (option value)	60% probability × $200M synergy/PV / 41M shares (deal announced Jul 22, close Nov 2026)	+2.93
Buyback tailwind (net of RSU dilution)	3.3% net share reduction / y × $305M FCF × 2 yr = $20M value / 41M sh	+0.50
MOVEit litigation reserve	$60M residual exposure (58 class actions, avg $1M net of settlements) / 41M shares	−1.46
FV base case	Sum + 1-yr discount at 10% CoE: 55.14 / 1.10 ≈	≈ $50.00

Bull

$60–$75

Probability: 20%

Domo integration accretive by FY27, EBITDA hits $430M, multiple re-rates to 10x on AI-platform narrative. Debt/EBITDA falls to <3x, MOVEit fully resolved for <$50M. Buyback accelerates. Consensus PT $53.80 exceeded.

Base

$45–$55

Probability: 50%

Guidance delivery: revenue $995M FY26, EBITDA $370M, non-GAAP EPS $6.15. Domo integration on plan. Debt/EBITDA moves to 3.5x. Litigation resolves within $60M reserve. Multiple stable at 8.5x.

Bear

$25–$35

Probability: 30%

MOVEit yields large adverse ruling ($200M+). Domo integration destroys value (Domo was FCF-negative). Rate rise pressures 4.1x leverage. Revenue growth stalls <3%. Multiple compresses to 6.5x. Covenant scare.

Methodology: Primary method EV/EBITDA on FY27E ($400M EBITDA, 8.5x peer-derived multiple). Implied multiple 8.2x within ±5% of nominal. Cross-check via P/FCF (11x on $305M TTM) reaches $52/sh, within ±5%. Sensitivity: ±1x multiple change = ±$9.75/share (±20% of FV). Weight distribution reflects VALUE profile bias toward downside protection (Bear 30% weight vs 25% neutral) — legacy MOVEit contingent liability + high leverage justify the tilt. ⚠️ Not investment advice. Not investment advice.

⚠️ Methodology note: Enterprise-software roll-up profile — valuation primarily via EV/EBITDA on forward EBITDA vs public peers (OpenText, Teradata, SolarWinds). Balance sheet leverage is material (Debt/EBITDA 4.1x, net debt −$29.84/sh) and requires explicit net debt subtraction line. Q2 2026 results (reported Jun 30) and July 22 Domo deal are the two most recent catalysts shaping the thesis.

📊 Capital Structure · Short Interest · Buyback & Dilution

🟡 Short Interest

10.26%

4.21M shares shorted on 41.0M outstanding. Days to cover: 4.1. Elevated (moderate range 5–15%) — reflects leverage & MOVEit concerns, not distress.

🟢 Share dilution (1Y)

−3.31%

42.4M → 41.0M shares. Active buyback net of RSU issuance. Buyback yield 3.3% at current prices; capital return prioritized alongside deleveraging.

🟢 Buyback

Active

Multi-year repurchase program executing. Priority order: 1) debt paydown ($110M in H1 2026), 2) buyback, 3) M&A (Domo $400M announced Jul 22). No dividend.

Short Interest — context

PRGS — 10.26%

10.26%

10.26% SI with 4.1 days-to-cover is elevated but not squeeze-territory. Reflects skepticism on: (a) MOVEit contingent liabilities, (b) Debt/EBITDA 4.1x limiting flexibility, (c) Domo deal integration risk. Insider selling in 2026 (CFO Folger $132K May 19, CLO Wang $144K May 18, EVP Subramanian ~$405K) all under pre-planned Rule 10b5-1 plans — routine, not signal, but combined amount <$700K over 12 months is not a red flag by itself.

$Financial analysis — FY 2025–2027E

Revenue TTM

$1.00B

+15.5% YoY (FY25 +30%)

EBITDA TTM

$322M

32.0% margin

FCF TTM

$305M

30.4% margin, $7.44/sh

Net Debt

$1.22B

4.13x EBITDA — high

Item	FY2024	FY2025	FY2026 Guidance	FY2027E
Revenue ($M)	753	978 (+30%)	990–1,010	1,050–1,100
Non-GAAP EPS ($)	4.91	5.72 (+16%)	6.09–6.21	6.50–7.00E
EBITDA ($M)	245	310E	360–380	400–420 (incl. Domo)
EBITDA margin (%)	32.5%	31.7%	36–38%	~38%
FCF ($M)	210	285	310–330	340–360
Total Debt ($M)	1,540	1,400	1,200–1,250	1,000–1,100
Cash & equiv. ($M)	172	140	~100 (post-Domo)	150–200

FY25 growth boosted by ShareFile acquisition (Sep 2024). FY26 guidance raised at Q2 (Jun 30). FY27E reflects full-year Domo ($310M revenue at neutral EBITDA post-integration cost cuts).

Quarterly dynamics — last 5 quarters
Metric	Q2 2025	Q3 2025	Q4 2025	Q1 2026	Q2 2026
Revenue ($M)	236.8	247.1	246.9	247.9	253.5
YoY growth %	+35%	+37%	+29%	+4%	+7%
Non-GAAP EPS ($)	1.24	1.44	1.51	1.31	1.62
Op. margin %	36%	39%	37%	36%	40%
Adj. FCF ($M)	52	65	78	72	79
Total Debt ($M)	1,470	1,430	1,400	1,340	1,290

Financial position and sustainability

FCF/Interest coverage

2.66x

Debt/EBITDA (target <3x)

4.13x

Return on Equity

18.57%

Gross Margin

85.57%

FCF Yield vs price

18.74%

account_tree

Business model — Infrastructure Software Roll-up + Data/AI Platform

Enterprise infrastructure software with acquisition-driven growth

Progress operates a portfolio of ~20 mature enterprise software products spanning application development (OpenEdge, Sitefinity, Kendo UI), DevOps/DevSecOps (Chef), data connectivity (DataDirect, MarkLogic), managed file transfer (MOVEit, Automate MFT/ShareFile), and secure communications. Revenue is 85% recurring (maintenance + subscription + SaaS). Growth engine = M&A: Ipswitch (2019), Chef (2020), Kemp (2021), MarkLogic (2023), ShareFile (2024), Domo (2026 pending). Each acquisition follows the same playbook: acquire mid-scale infrastructure asset at 3-4x revenue, retain customers, cut ~25% opex, extract 40% operating margin within 18 months.

Data Platform (AI/RAG) ~$350M FY27E (30% rev) 🟢 ramping MarkLogic + DataDirect + Semaphore + Agentic RAG. Domo acquisition (Nov 2026) doubles capabilities. AI-native positioning. GM 82%. Digital Experience ~$280M FY27E (25% rev) 🟢 stable Sitefinity CMS, Kendo UI, Corticon. Mature, high-margin. Recent Sitefinity Generative CMS launch. GM 88%. Infrastructure Mgmt ~$260M FY27E (23% rev) 🟢 stable Chef DevOps, Kemp LoadMaster (ADC), WhatsUp Gold. Reliable maintenance revenue. GM 84%. Secure File & Collab ~$180M FY27E (16% rev) 🟡 recovering MOVEit, Automate MFT, ShareFile. MOVEit brand damaged post-2023 breach but still core cash generator. Rebuilt security posture. GM 80%. Application Dev (Legacy) ~$60M FY27E (6% rev) 🔴 declining OpenEdge — legacy 4GL. Slow decline offset by maintenance stickiness. Highly profitable but sunset trajectory. Domo (pending) ~$310M FY27E full-year 🟡 to prove $400M cash acquisition ($355M net), close Nov 2026. BI/analytics + AI. Domo was FCF-negative; PRGS expects >25% opex synergies to reach 30%+ EBITDA margin.

gavel

Legal, regulatory and risk analysis

MOVEit class actions & SEC probe

High

58+ class action lawsuits + state/federal/international investigations tied to May 2023 MOVEit breach affecting 62M+ people. Company explicitly states "cannot reasonably estimate a range of possible losses". Individual settlements so far small ($9.95M National Student Clearinghouse, $2.39M Union Bank Apr 2026), but aggregate exposure unquantified. Tail risk of adverse ruling remains material.

Leverage 4.1x Debt/EBITDA

High

$1.33B total debt vs $103M cash. Interest coverage only 2.66x. Altman Z-Score 1.31 (statistically elevated bankruptcy signal, though FCF profile contradicts). Domo cash outflow (~$355M net) reduces near-term flexibility. Rate environment tightening covenants.

Domo integration execution

Moderate

$400M for a FCF-negative asset. PRGS's playbook (25% opex cut → 30% margin in 18 months) is well-proven but Domo is a different business (BI/analytics vs infrastructure). Customer churn during transition, dilutive to margins in first 2 quarters.

Low organic growth

Moderate

3Y revenue growth forecast only 1.37%, 3Y EPS growth 3.32%. Growth pattern is: acquire → digest → acquire again. If M&A pipeline dries up or overpays, model breaks. Recent 15% headline growth is inorganic.

Insider selling patterns

Low

CFO ($132K), CLO ($144K), EVP ($405K) sold in 2026 — all under pre-planned Rule 10b5-1 arrangements. Combined <$700K, small relative to comp. Not a signal in isolation, but worth monitoring if cluster expands.

FCF generation strength

Positive

$305M annual FCF, 30% margin, 18.7% FCF yield. Business converts EBITDA to cash at ~95%. Even in Bear scenario, FCF likely stays above $250M — provides self-funded debt paydown ceiling and buyback support.

Buyback discipline

Positive

Net share count down 3.31% YoY despite active RSU program. 3.31% buyback yield combines with 0% dividend to give shareholder yield of 3.31%. Management prioritizes returning capital when stock is cheap.

Peer-relative valuation

Positive

Fwd P/E 6.7x is the cheapest in peer group (OTEX 6.0x, TDC 7.5x, SWI 14.0x). EV/EBITDA 8.9x TTM at peer median. Valuation offers downside cushion vs typical software multiples of 15-25x.

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SWOT analysis

Strengths

+Best-in-class FCF conversion: $305M FCF on $1.00B revenue (30% margin)
+Proven M&A integration playbook — 5 major acquisitions in 6 years all margin-accretive
+Recurring revenue base ~85% (maintenance/SaaS) providing predictability
+Gross margin 85.57%, EBITDA margin 32% — top-quartile software profile
+Active buyback with net share reduction 3.31% YoY

Weaknesses

−Debt/EBITDA 4.13x limits balance sheet flexibility
−Organic revenue growth only 4-7% — dependent on M&A for headline growth
−MOVEit brand damage still weighing on cross-sell & new customer acquisition
−Current ratio 0.81 (working capital negative $80M)
−Fragmented product portfolio (20+ SKUs) with limited cross-sell synergy

Opportunities

→Domo close (Nov 2026) — AI/BI capability doubles data platform footprint
→Agentic RAG launch positions PRGS in the AI infrastructure narrative
→Continued deleveraging → multiple re-rating if Debt/EBITDA reaches <3x
→MOVEit litigation resolution removes tail-risk discount from multiple
→Enterprise software consolidation — PRGS could become target itself at 2.5x rev

Threats

!Adverse MOVEit ruling could exceed $200M reserve estimate
!Domo integration failure — company was FCF-negative pre-deal
!Rate environment squeezing 2.66x interest coverage
!Competitive displacement in data platform vs Snowflake/Databricks/Microsoft Fabric
!M&A pipeline dry-up would expose slow organic growth (~1-2%)

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Summary by assessment area

🟡 Financial risk — Moderate

FCF strength ($305M/y) offsets leverage concerns
Debt/EBITDA 4.1x is peak, trending down
Interest coverage 2.66x adequate but not comfortable
No dividend; capital allocation focused on debt + buyback

🟡 Regulatory/Litigation — Moderate-High

MOVEit tail risk unquantified but manageable in base case
SEC investigation open — status quo, no new escalation
Insider transactions all under 10b5-1 pre-plans
Standard enterprise software regulatory environment

🔵 Valuation — Moderately attractive

Fwd P/E 6.7x + EV/EBITDA 8.9x = at low end of software peer range
Base FV $50 vs $40.34 spot = +24% upside
Consensus $53.80, Strong Buy (5 analysts)
Not a compounder — a mean-reversion + cash-yield play

2026-09-30earnings

Q3 FY2026 Earnings Release

short-termImpact: HighDirection: Binary

Guidance $244-250M revenue, $1.53-1.59 non-GAAP EPS. Watch: license revenue trajectory post-Q2 spike (+36%), FY26 guidance re-affirmation, Domo pre-close commentary.

2026-11-30ma

Domo AI/Data Platform Acquisition Close

medium-termImpact: HighDirection: Neutral

$400M ($355M net) cash deal, adds $310M revenue. Antitrust/HSR clearance expected. Integration playbook: 25% opex cut targeting 30%+ EBITDA margin in 18 months.

2026-12-15regulatory

MOVEit MDL Consolidated Case Management Milestones

medium-termImpact: HighDirection: Binary

Ongoing 58+ class action consolidation. Any large settlement or motion ruling materially moves the reserve estimate. Base case $60M residual exposure could swing ±$150M.

2027-01-15guidance

FY2027 Initial Guidance (with Domo)

medium-termImpact: HighDirection: Bullish

First guidance including full Domo year. Revenue expected $1.25-1.35B, EPS growth from operational leverage. Bull case: EBITDA margin expansion to 38%+ triggers multiple re-rating.

2027-01-15earnings

Q4 FY2026 Earnings + Full Year Results

medium-termImpact: HighDirection: Binary

Full FY26 delivery vs raised $6.09-6.21 EPS guide. Deleveraging update ($1.29B → target <$1.25B by year-end). Domo pre-close operational commentary.

2026-12-31capital_markets

Revolver & Term Loan Refinancing Assessment

medium-termImpact: MediumDirection: Neutral

Post-2026 convertible redemption (April 2026, used revolver). Rate environment for future refinancing directly affects interest coverage. Watch covenant headroom disclosures in 10-K.

2027-03-31product

Agentic RAG Enterprise Adoption / Q1 FY27 Data Platform Metrics

long-termImpact: MediumDirection: Bullish

Progress Agentic RAG-as-a-Service launched Q2 2026. Enterprise pipeline conversion in FY27 is the first real test of AI-narrative revenue contribution. Award-winning tech but adoption unproven.

2027-05-31strategic

Potential Analyst Day / Long-term Model Update

long-termImpact: MediumDirection: Neutral

Historical PRGS analyst days re-frame the roll-up narrative. Would include long-term margin target, M&A capacity, and post-Domo synergy delivery scorecard.

Sources & Disclaimer

Sources: Progress Software Q2 2026 Earnings Release (Jun 30, 2026), Q2 2026 Earnings Call Transcript (SeekingAlpha), 8-K filings SEC EDGAR, StockAnalysis.com PRGS statistics (Jul 30, 2026), GuruFocus peer EV/EBITDA (OTEX, TDC, SWI), TheFly analyst notes (DA Davidson, Oppenheimer, Citi), StockTitan SEC filings for insider Form 4 disclosures, Cybersecurity Dive & The Record for MOVEit litigation status, ClassAction.org. Market data — last verified close 2026-07-30: PRGS $40.34, market cap $1.65B, 52W range $23.82–$49.88, shares outstanding 41.01M. Short interest 10.26%. Enterprise value $2.85B. Prezzo usato: $40.34 (close 2026-07-30, T-1) — fonti: StockAnalysis.com (real-time), AAII (article "PRGS Stock Is Down 5.18%" Jul 30 2026). ⚠️ This document is for informational purposes only and does not constitute financial or investment advice.